Seventh Lecture on CHANNELS & SCM Case Examples of channel net work for some products Channel Management Distribution channels options & design pattern for B2B &B2C Supply Chain Management: Objectives Process of supply chain & logistics management
Case Examples of channel net work for some products INDUSTRY PRODUCT CHANNELS FOR CUSTOMER Textile industry Fabrics Mills to dealers/ wholesalers/ to retailers/garment units Steel Iron ore coal Direct from mine owners to steel mills Steel products Stockist, dealer, retailer and customer (small) Stockist, dealer and customer( big builders) Direct to OEM Capital goods Industrial machines Direct to the customers(industries) and/or through agents Automobiles Commercial vehicles/ passenger cars Dealers & company show rooms Electronics Consumer durables company show rooms/ & through dealers to retail outlets Banking Banks Branches
Channel Management Channel management Selection Motivation Training Evaluation Managing conflict
Conventional vs. Vertical Marketing System A distribution channel structure in which producers, wholesalers, and retailers act as a unified system .
Distribution channels options & design pattern for B2B &B2C M N U F A C T R E DIRECT MARKETING ( OEM) C U S T O M E R RETAILERS DEALERS/ DISTRIBUTORS STOCKISTS AGENTS channel selection is depended product type, regional coverage & customer type
Performance evaluation parameters for channel members (Minimize cost & Maximize profits ) MARKET & CUSTOMER FEED BACK M A R K E T I N G TEAM
Supply Chain Management
Supply Chain Management: Objectives Main Objectives Smooth flow of goods from factory to customers Cost reduction in supply chain system Production planning Minimum inventory Timely delivery Packaging should ensure safe delivery/ no loses
The Supply Chain of a Manufacturing Company
Process of supply chain & logistics management Transportation, Warehousing, Distribution to channel Members, Dispatches to customers. Production planning Inventory control Processing, customer Orders, Packing, Dispatches, etc Customer service, Performance evaluation, Market feed back Follow up by sales force Purchase of Raw materials Comp Spares, etc Raw material sourcing, Production planning Transportation, Distribution & Customer servicing
What is the extent of outsourcing of supply chain activities? Inventory Management Yes No Order Processing Customer Service Procurement Import/Export Mgmt Information Systems Manufacturing Warehousing Transportation 10 20 30 40 50 60 70 80 90 100 Percentage Number of Respondents
Supply Chains Implementation What are the benefits achieved by supply chain implementation? Measurable Indicators Extent of Improvement 1. Sales Revenue Increased 20.2% 2. Profits Increased 15.5% 3. Order to Delivery Cycle time Reduced 32.8% 4. Inventory Reduction a. Raw Material 25.1% b. WIP 38.7% c. Finished Goods 32.1% 5. On Time Delivery Improved 33.4% 6. Customer Base Increased 27.7%
Supply Chain: Components of Cost Of Sales & Distribution Margins Direct Cost : Cost Of Raw Material +Conversion Cost Into Finished Product +Packaging Distribution & marketing +Transportation +Cost Of Distribution (Margins) + Inventory Cost/Warehouse Cost +Cost Of Servicing Other fixed costs + marketing/ selling Costs + other fixed costs( depreciation, interest, etc) +Taxes/duties Profit Margins Selling Price To The Customers
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